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The report also found that £34,000 was been given to the Cordoba Foundation in 2007/08 – an Islamist pressure group which offered a platform to Hizb ut-Tahrir who promote the view that democracy is forbidden in Islam.

In March this year, the Department for Communities and Local Government said Tower Hamlets council has terminated its funding agreement with the Foundation for 2007/08. However, the FOI requests showed only £4,000 was withdrawn by the authority.

Matthew Sinclair, research director at the TaxPayers’ Alliance, said: “Giving councils millions of pounds to dole out to hundreds of community groups clearly creates a massive risk that money will be wasted or finance groups hostile to Britain's liberal, democratic values.

“The Government has failed to avoid endorsing or funding radicals in the past and as such it's totally unrealistic to expect local councils to be able to assess which groups warrant funding.

“Grants to community groups aren't just risky though, they can also be divisive and wasteful.

“Politicians of all parties need to acknowledge that the approach has failed, cancel this programme and start focusing directly on stopping terrorists.”

The report said Prevent funding should now be abolished at a national level or it should not be ring-fenced allowing councils to decide its best use.

A DCLG spokeswoman said: "Local Authorities are required to have robust procedures in place in order to ensure that grants are spent as intended.

"Where there is evidence that a group hasn't used funds as intended, the local authority would need to investigate and take appropriate action. This might include legal proceedings or simply ending all funding to that group.

"Any concerns or evidence about money being used inappropriately will be taken very seriously and investigated thoroughly."